Spending cuts to cost state 60,000 jobs, report says

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WASHINGTON -- Massachusetts will lose more than 60,000 jobs, much of it in the defense industry, and $127 million in federal research funding, harming a critical sector of the state economy, if Congress allows across-the-board spending cuts to go into effect in March, according to a report released Friday by Representative Edward Markey of Malden.

The automatic cuts, known in Beltway parlance as “sequestration,” were scheduled to take place in January under a 2011 budget deal to raise the nation’s debt limit, but the crisis was temporarily averted when Congress struck a last-minute New Year’s Eve bargain.

The two-month delay in cuts now worth $85 billion for the rest of fiscal year 2013 -- comprised equally of defense and domestic spending -- were supposed to buy the White House and Congress time to negotiate a broader deal that includes reform to entitlement programs such as Medicare and Social Security.

But with the deadline looming and Congress out for recess next week and not due to return until February 25, that leaves just four days with the House and Senate in session before the cuts are supposed to begin. The deadline was set in hopes that it would force Republicans and Democrats to come up with a grand bargain - or even a modest one - to cut the deficit.

President Obama has said he would be open to a smaller deal that would include cuts, entitlement reform, and new tax revenues to avoid sequestration, which he said would be devastating to the nation’s fragile economic recovery. That has prompted talk that the deadline might be extended.

While last-minute deals are common in Washington, and both parties have expressed opposition to the cuts, the looming deadline has heightened the possibility that sequestration will be enacted. But some analysts are already assuming that sequestration will take place, while stressing that it is unclear which programs or agencies will be most acutely affected and for how long.

“The political system is paralyzed by the different philosophies of the parties and the inability of either to enforce their solution,” said Loren Thompson, a defense industry consultant at Source Associates in Arlington, Virginia. “So sequestration will go forward because it is already the law. The question is once it triggers on March 1 what happens then? Will there be a surge of complaints from constituents that leads the parties to change their position? If not, we could have sequestration for a long time with all the destructive consequences that implies.”

Gordon Adams, a former analyst in the White House Office of Management and Budget, suggested the cuts are likely to go into effect, at least for some period of time.

“I think it is extremely likely,” said Adams, who now teaches at American University. “Anybody I talk to says there is no real discussion going on here about how to avert it.”

Markey, dean of the Massachusetts delegation and who is running against fellow Democrat Stephen Lynch in a special election for U.S. Senate, said the undiscriminating cuts resulting from sequestration could be staved off with targeted cuts to defense spending and nuclear weapons, ending oil subsidies, and reforming the tax code.

“We’re not only the Bay State, we’re the Brain State, and that did not happen by chance,” Markey said in an interview. “It’s in large part due to federal funding that supports our leading researchers and scientists and innovative bio-tech companies, and federal funding that supports our education programs, and the billions of dollars our hospitals receive to train the next generation of doctors. The massive arbitrary cuts threaten Massachusetts’ role as the nation’s high tech, bio tech, clean tech hub.”

Massachusetts, which brings in more NIH funding per capita than any other state, has more to lose under sequestration because of the outsized role research universities, teaching hospitals and biotechnology companies play in the state economy, Markey said. These institutions rely on billions of dollars from the National Institutes of Health and the Department of Defense for research funding.

John Erwin, executive director of the Conference of Boston Teaching Hospitals, said a reduction of about 8 percent to the National Institutes of Health would follow several consecutive years of flat funding at a time when countries like China, India and Singapore are investing heavily in research.

The squeeze has already caused scientists trained in Massachusetts to be wooed away by other countries because “they can offer them more money and brand new spanking labs,” Erwin said.

“We’re letting our foot off the gas pedal, and they are looking for opportunities to be number one,” he said.

The automatic cuts would also imperil a series of local projects funded by the military, according to Markey.

One area is the so-called Small Business Innovation Research Program, which funds early-stage research of new technologies. Massachusetts could see as many as 26 projects with more than $7 million go away under sequestration.

In addition to defense and research, Markey said Massachusetts faces a loss of tens of millions in federal education funding, including $10.7 million for approximately 1,000 schools serving a high number of students from poor families and $14.4 million for students with disabilities.

The state would also lose approximately $6.3 million for Head Start, an early childhold education program for low-income children that President Obama highlighted during his State of the Union address.

More than 200,000 low-income families and seniors who receive federal assistance to heat their homes would also be hurt if sequestration causes the state to lose $6.7 million that funds the program.

Correction: Because of incorrect information provided to the Globe, some figures in an earlier version of this story were misstated about the amount of federal funds Massachusetts could lose with the sequester.

Correction: Because of incorrect information provided to the Globe, some figures in an earlier version of this story were misstated about the amount of federal funds Massachusetts could lose with the sequester.

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